Path to Profitability: Equilibrium Explained

Overview

The video explains “equilibrium” as a technical-analysis continuation confluence used to identify premium/discount ranges inside a trend and to help time entries when combined with other confluences.

Assets / tools / applicability

• No specific tickers or instruments mentioned. Concepts and tools referenced:
  • Price action, market makers, liquidity sweeps
  • Fair value gap (FVG) and inverse FVG
  • GAN box (indicator/tool)
  • Break of structure
  • SMT divergences (not covered in this video)
• Applicable across instruments and timeframes (example shown on the weekly).

Key definition

Equilibrium = the 50% midpoint of the most recent swing (swing low → swing high in an uptrend; swing high → swing low in a downtrend). The 50% mark is used as a continuation confluence.

How to mark equilibrium (step-by-step)

1. Identify the current trend direction (uptrend or downtrend).
2. In an uptrend:
   • Draw from the MOST RECENT swing low up to the MOST RECENT swing high.
   • Equilibrium = 50% of that range.
3. In a downtrend:
   • Draw from the MOST RECENT swing high down to the MOST RECENT swing low.
   • Equilibrium = 50% of that range.
4. Wait for price to interact with equilibrium:
   • Uptrend: avoid buying above equilibrium (premium); prefer buy opportunities when price dips into the discount (below equilibrium) and you receive bullish confirmation confluences.
   • Downtrend: treat the premium zone (above equilibrium) as a potential short-entry area if bearish confluences appear.
5. Use equilibrium only as one confluence; require confirmation (e.g., liquidity sweep, inverse FVG, FVG fills, break of structure) that orders were filled and trend continuation is likely.

Confluence / confirmation framework

Typical sequence used in examples:

1. Identify a liquidity sweep (sweep low or sweep high).
2. See an inverse FVG (indicating orders being filled).
3. Look for a continuation confluence: either a fair value gap fill or price moving into/under equilibrium (discount/premium) then returning in the direction of the trend.
4. Enter with the trend after confirmation (buy in discounted zone in an uptrend; short in premium zone in a downtrend).

The presenter stresses using equilibrium together with FVGs, liquidity, and break of structure for higher-probability trades.

Recommendations and cautions

• Always draw equilibrium from the MOST RECENT swing points — repeatedly emphasized as the single biggest error.
• Do not buy simply because price is above equilibrium in an uptrend (avoid buying in premium).
• Equilibrium alone is insufficient — use it with context and concurrent confluences for valid setups.
• Applicable on all timeframes (including weekly), but the context and timeframe matter.
• Wait for confirmation before entering; trade with the trend; treat setups like market-maker behavior (seek discounted accumulation).

Examples / behavior descriptions

• Uptrend example: price dips below equilibrium (discount), fills orders, then pushes above the prior swing high → continuation higher.
• Downtrend example: equilibrium drawn high→low, price moves into premium, briefly pokes above premium, then resumes lower.
• Equilibrium may or may not be directly filled; other confluences (e.g., FVG fills, liquidity sweeps) can compensate.

Performance / risk management

• No explicit performance metrics, price targets, or fixed risk parameters provided.
• Implied risk practices:
  • Wait for confirmation before entering.
  • Trade with the trend.
  • Avoid buying in premium zones.

Disclosures

• No explicit financial-advice disclaimer appears in the transcript. The presenter repeatedly warns that setups are useless without proper context.

Presenter / source

• Presenter identified as TJR.